Experts predict Sweden’s economy set to grow

The Swedish economy is getting stronger, with the most optimistic analysts predicting that GDP growth will land at around three percent in 2015. But inflation has still not gained momentum and interest rates are set to remain at record low levels.

Experts predict Sweden's economy set to grow
Analysts believe Sweden's GDP will grow by around three percent in 2015. Photo: Christine Olsson/SCANPIX

A survey in March reported that despite the economy growth spurt, negative interest, record stock exchange trade, and political instability had put a damper on Swedes' willingness to spend the extra cash in their purse and that most consumers were instead choosing to save their money.

But analysts said on Thursday that they believe this is about to change.

“We think that households will continue to increase their consumption," Jesper Hansson, analyst at the Swedish government's own forecast authority, Konjunkturinstitutet (KI) told news agency TT on Thursday. "And property investments are also rapidly increasing,” he added.

The weaker-than-normal Swedish krona has strengthened the export industry, which has also benefited from a stronger European market.

“We can clearly see that exports are growing more rapidly and the development in Europe is a very important factor, it's a large export market for us,” said Hansson.

GUIDE: What a weak krona means for you

Only weeks ago, the Riksbank (the Swedish central bank) cut its key interest rate, the repo, to record negative levels to prevent inflation from stalling after the krona showed signs of growing stronger. Riksbank chiefs said that its recent appreciation risked breaking a positive trend of rising inflation.

“The Executive Board of the Riksbank has decided to make monetary policy even more expansionary by cutting the repo rate by 0.15 percentage points to -0.25 percent and buying government bonds for 30 billion kronor, to support the upturn in inflation,” said the bank in a statement at the time.

And some analysts predicted on Thursday that the Riksbank would slash the repo even further in the spring.

“We think that the Riksbank will continue to lower interest rates in April. It is very focused on establishing confidence in the inflation goal,” Annika Winsth, chief economist at Swedish banking giant Nordea, told TT.

Meanwhile, KI predicts that GDP will grow by 3.1 percent in 2015. This compares to OECD figures estimating a 2.9 percent growth and the Riksbank's and the Swedish government's own predictions of 2.4 and 2.7 percent, respectively.

In February the krona hit its weakest level since the financial crisis. It has since recuperated slightly, with 9.3728 kronor required to buy a euro on Thursday, compared to 9.6835 kronor over a month ago.

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Pensions in the EU: What you need to know if you’re moving country

Have you ever wondered what to do with your private pension plan when moving to another European country?

Pensions in the EU: What you need to know if you're moving country

This question will probably have caused some headaches. Fortunately a new private pension product meant to make things easier should soon become available under a new EU regulation that came into effect this week. 

The new pan-European personal pension product (PEPP) will allow savers to take their private pension with them if they move within the European Union.

EU rules so far allowed the aggregation of state pensions and the possibility to carry across borders occupational pensions, which are paid by employers. But the market of private pensions remained fragmented.

The new product is expected to benefit especially young people, who tend to move more frequently across borders, and the self-employed, who might not be covered by other pension schemes. 

According to a survey conducted in 16 countries by Insurance Europe, the organisation representing insurers in Brussels, 38 percent of Europeans do not save for retirement, with a proportion as high as 60 percent in Finland, 57 percent in Spain, 56 percent in France and 55 percent in Italy. 

The groups least likely to have a pension plan are women (42% versus 34% of men), unemployed people (67%), self-employed and part-time workers in the private sector (38%), divorced and singles (44% and 43% respectively), and 18-35 year olds (40%).

“As a complement to public pensions, PEPP caters for the needs of today’s younger generation and allows people to better plan and make provisions for the future,” EU Commissioner for Financial Services Mairead McGuinness said on March 22nd, when new EU rules came into effect. 

The scheme will also allow savers to sign up to a personal pension plan offered by a provider based in another EU country.

Who can sign up?

Under the EU regulation, anyone can sign up to a pan-European personal pension, regardless of their nationality or employment status. 

The scheme is open to people who are employed part-time or full-time, self-employed, in any form of “modern employment”, unemployed or in education. 

The condition is that they are resident in a country of the European Union, Norway, Iceland or Liechtenstein (the European Economic Area). The PEPP will not be available outside these countries, for instance in Switzerland. 

How does it work?

PEPP providers can offer a maximum of six investment options, including a basic one that is low-risk and safeguards the amount invested. The basic PEPP is the default option. Its fees are capped at 1 percent of the accumulated capital per year.

People who move to another EU country can continue to contribute to the same PEPP. Whenever a consumer changes the country of residence, the provider will open a new sub-account for that country. If the provider cannot offer such option, savers have the right to switch provider free of charge.  

As pension products are taxed differently in each state, the applicable taxation will be that of the country of residence and possible tax incentives will only apply to the relevant sub-account. 

Savers who move residence outside the EU cannot continue saving on their PEPP, but they can resume contributions if they return. They would also need to ask advice about the consequences of the move on the way their savings are taxed. 

Pensions can then be paid out in a different location from where the product was purchased. 

Where to start?

Pan-European personal pension products can be offered by authorised banks, insurance companies, pension funds and wealth management firms. 

They are regulated products that can be sold to consumers only after being approved by supervisory authorities. 

As the legislation came into effect this week, only now eligible providers can submit the application for the authorisation of their products. National authorities have then three months to make a decision. So it will still take some time before PEPPs become available on the market. 

When this will happen, the products and their features will be listed in the public register of the European Insurance and Occupational Pensions Authority (EIOPA). 

For more information: 

This article is published in cooperation with Europe Street News, a news outlet about citizens’ rights in the EU and the UK.